Daimler will be profitable for the second quarter, although its Mercedes-Benz car division will post a slight loss.
Like other automakers, Daimler AG will release the company’s second-quarter financial report later this month, but it also disclosed it expects earnings for the April-to-June quarter to beat expectations despite the recall of thousands of vehicles equipped with Takata airbags.
“Daimler AG has achieved a Group EBIT adjusted for special reporting items for the second quarter that is significantly above market expectations. Group EBIT adjusted for special reporting items sums up to” 3.97 billion euros, or $4.41 billion, compared with 3.76 billion, or $4.17 billion, for the second quarter of 2015, the company said in a statement this week.
EBIT is defined as: earnings before income taxes minus interest income plus interest expenses plus amortization of capitalized borrowing costs, Daimler said.
The figures released by Daimler indicated that the company’s operating income during the second quarter has offset a heavy dose of special charges, such as those relating to the recall of thousands of vehicles equipped with Takata-made airbags, re-evaluation of inventories and expenses incurred during a patent dispute.
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The company’s Mercedes car division took at 440 million euro, about $488 million, hit to account for Takata’s faulty airbags. Despite that, the EBIT adjusted for special reporting items reached by Mercedes-Benz cars totaled 2.21 billion euros, $2.43 billion, which was down slightly from the 2.23 billion euros, $2.45 billion, posted for the same period in 2015.
The company's van division is expected to post a profit for the second quarter of the year.
Additionally, Daimler took one-time adjustments totaling 1.38 billion euros, according to figures released by Daimler, that were offset by the contribution of Renault and Nissan shares valued at 605 million euros. But the adjustments were substantially larger than those recorded during the second-quarter of 2015.
Daimler trucks, the company’s other major division, recorded EBIT of 66 million euros, compared 717 million euros the same period a year ago.
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Mercedes-Benz vans, however, saw its EBIT climb 462 million euros from 238 million euros a year ago despite the heave expense of a one-time charge to cover the cost of aforementioned defective Takata air bags.
Daimler buses also saw its income climb to 89 million euros from 57 million euros in the second quarter a year ago. Daimler Financial Services also reported higher EBIT of 479 million euros, compared to 445 million euros during the second quarter of 2015.
Daimler also the outlook for Group EBIT 2016 adjusted for special reporting items remains unchanged with Daimler expects Group EBIT adjusted for special reporting items increase slightly increase in 2016 as expected earlier.
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On the basis of the expectations, Mercedes-Benz Cars is expected to perform slightly above the prior-year level, while the outlook for Daimler Trucks is significantly below prior-year level, Mercedes-Benz Vans will come in significantly above the prior-year level, while Daimler Buses will be slightly above the prior-year level, and Daimler Financial Services will also be slightly above the prior-year level, Daimler said.